In June, President Obama directed the U.S. Environmental Protection Agency to propose standards regulating greenhouse gas emissions (“GHG”) from existing power plants. The requirements would be imposed under Section 111(d) of the Federal Clean Air Act. Under the directive, the EPA is to propose such standards no later than June 2014 using a process that would require individual states to submit plans no later than June 30, 2016, explaining to the EPA how the states will implement those standards. The prospect of these regulations is expected to focus directly on the use of coal as a fuel for electric power generation.

The President’s June directive to EPA included an instruction that EPA work closely with the states, which “will play a central role” in the process of implementation of GHG regulations. Drawing on this late last month, the National Association of Regulatory Utility Commissioners adopted a resolution stating that EPA should “rely on both state utility and environmental regulators to lead the creation of emission performance systems that reflect the policies, energy needs, resource mix, [and] economic conditions of each state and region.” A copy of the Resolution is available, along with a short summary of the proceeding, at The Hill website here.

The fundamental issue at play is the long-term cost of alternative fuels that might replace coal, and the potential for retiring or reducing the use of existing coal-fired plants before they would otherwise become obsolete. These prospects have the potential for direct impacts on rate payers who may be required to share the cost of replacement plants or systems while also completing payoff of the construction costs of the existing coal-fired plants. There are also direct concerns associated with the production of coal in areas where that activity is a major component of the local economy.